Levels to watch: FTSE, Dax and S&P 500

Indices enjoyed another good week, but Friday ended with signs that at least some short-term weakness was on the cards.

Traders viewing data boards
Source: Bloomberg

FTSE 100 rally seeks to continue
This rally has confounded expectations time and again, so it would be unwise to suggest it has run its course. Nonetheless, Friday's trade saw the index reach the 6100 area, last seen at the beginning of February, and then turn lower, so for now this the upside level to watch.

A move above here takes us on to 6178 and then to the late December 2015 high at 6320 (which would then put the price back above the 200-day simple moving average [SMA] for the first time since July 2015). Some support is possible around 6030, but a drop sub-6000 puts us back inside the descending channel, reigniting the longer-term correction. 

DAX headed lower
Despite the rally over the second-half of last week, the index wasn't able to push on through 9600 for a second time in as many weeks. The risk now lies to the downside, with the key 9250 area (lows of August, September and January) now in prospect.

Below this targets would be 9180 and then potentially back down to the February lows around 8700. A longer-term rally needs to break the downtrend line off the December highs, which would suggest a move through 9700. 

S&P 500
S&P 500 bulls will be worried by the failure to move on through 1950 on Friday, and the lower open today, coupled with a drop for the relative strength index below its five-period exponential moving average, suggests we are in for at least a period of weakness.

A drop back to support around 1906 is a possibility, with 1900 itself the major area to watch if the sell-off intensifies. Below 1900 the index would be heading back to the key lows of January/February, around 1840 and 1820. A bounce through 1950 would then head towards 2000 over the longer-term. 

S&P 500 chart

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